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2017 | OriginalPaper | Chapter

19. Product-Service Systems Under Availability-Based Contracts: Maintenance Optimization and Concurrent System and Contract Design

Authors : Amir Kashani Pour, Navid Goudarzi, Xin Lei, Peter Sandborn

Published in: Advances in Through-life Engineering Services

Publisher: Springer International Publishing

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Abstract

Product-service systems (PSSs) are the result of a shifting business focus from designing and selling physical products, to selling a system consisting of products and services in an ongoing relationship with the customer that fulfills customer satisfaction. A PSS contract can take several forms (e.g., fixed price, capability-contract, and availability-based). The focus of this chapter is on PSSs that use availability-based contracts. In these cases the customer does not purchase the product, instead they purchase the utility of the product and the availability of service in order to obtain a lower cost while still meeting their needs. This chapter addresses the optimization of system maintenance activities, and the concurrent design of the PSS and the contract.

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previous chapter Cost Model for Assessing Losses to Avionics Suppliers During Warranty Period
next chapter Application of Open Source Hardware to the Development of Autonomous Maintenance Support Systems
Footnotes
1
We assume that ideally the design of the PSS means designing the hardware, software, service, and logistics associated with the system concurrently. Section 19.4 of this chapter includes contract design in this process as well.
 
2
Classically “inventory” refers to an inventory of items (e.g., spare parts), however, more generally, it could mean a maintenance “opportunity inventory”, which is a combination of all the resources necessary to support the system, i.e., workforce, facilities, favorable weather, and spare parts. This broader interpretation of inventory (previously eluded to by [10]) is a departure from mainstream operations research that only thinks of inventory as parts.
 
3
This is not the difference between the predictive and corrective maintenance actions, but rather the cost of just a corrective maintenance event. The predictive maintenance event cost is subtracted later when the real option value is determined, i.e., in Eq. (19.2).
 
4
The value construction in this section assumes that the system is revenue earning, e.g., a wind turbine or an airplane used by an airline.
 
5
For example, if the system is a wind turbine, path uncertainties could be due to variations in the wind over time.
 
6
This could be due to the limited availability of maintenance resources or the limited availability of the system being maintained.
 
7
The decision-maker may also have the flexibility not to implement the predictive maintenance on a particular date but to wait until the next possible date to decide, which makes the problem an American option style as has been demonstrated and solved by [12]. The Haddad et al. solution in [12] is correct for the assumption that an optimal decision will be made on or before some maximum waiting duration and the solution delivered is the maximum “wait to date”. Unfortunately, in reality maintenance decision-makers for critical systems face a somewhat different problem: given that the maintenance opportunity calendar is known when the RUL indication is obtained, on what date should the predictive maintenance be done to get the maximum option value. This makes the problem a European option style.
 
8
In [18] the inventory lead time (ILT) was considered to be a logistics parameter determined from an availability requirement. It is also possible that ILT is a contract parameter that is flowed down to subcontractors.
 
9
Although we include warranty design in the list of possible contract design activities that could be driven by the product parameters, for most products that have warranties, the type of warranty and its length are determined by marketing, and are not based on the product’s predicted reliability. More commonly, the warranty type and length (which are a contract) are passed to the engineering design to determine the appropriate warranty reserve fund, which would be an example of the first category.
 
10
Mechanism design theory is an economic theory that seeks to determine when a particular strategy or contract mechanism will work efficiently.
 
11
This problem is also evidenced by the choice of a single value for the cost of money, i.e., the cost of money is not constant over time (nor the same for all projects within an organization).
 
12
While there are some major manufacturers who appear to (or claim to) use an integrated approach in concurrently designing contract and product parameters, they are unpublished and no details are available.
 
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Metadata
Title
Product-Service Systems Under Availability-Based Contracts: Maintenance Optimization and Concurrent System and Contract Design
Authors
Amir Kashani Pour
Navid Goudarzi
Xin Lei
Peter Sandborn
Copyright Year
2017
Book
Advances in Through-life Engineering Services

Print ISBN: 978-3-319-49937-6

Electronic ISBN: 978-3-319-49938-3

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-3-319-49938-3_19